South Africa’s Bailout Bill for State Firms Nears $30 Billion
Bailouts for cash strapped South Africa’s state companies have cost taxpayers 456.5 billion rand (about $25.9 billion) over the past nine financial year, and the bill is set to rise to 520.6 billion rand by the end of March next year, according to the National Treasury.
The aid has been financed by increasing borrowing and cutting back on other budgetary allocations, with spending on infrastructure and essential goods and services the most impacted, the Treasury said in a presentation to lawmakers in Cape Town on Tuesday.
Power utility Eskom Holdings SOC Ltd. has received the bulk of the bailouts — it will have received a total of 496 billion rand by the end of the current financial year. South African National Roads Agency SOC Ltd. has been alllocated a total of 47 billion rand and South African Airways, the national carrier, 49 billion rand. Transnet SOC Ltd., the state logistics company, requested 61 billion rand late last year.
“Broad reforms are underway in energy, freight, water and telecommunications,” Rudzani Mandiwana, the Treasury’s chief director of asset and liability management, told lawmakers. “It will take time to reverse the consequences of operational, maintenance and governance failures at SOC’s responsible for electricity, rail and ports.”
